Domino’s rose 0.4% to 501p after gaining as much as 3.4% earlier to the highest price since Sept 2011. The FTSE 350 Index fell 1%.
Canaccord upgraded Domino’s to buy from hold and said the pizza company’s revenue was gaining because of rainy weather, which helped sales as customers ate at home, as well as the televised soccer games and more online purchasing.
“We see underlying momentum continuing into the second half,” analyst Wayne Brown said in a note. “The majority of this additional growth is likely to be volume, as opposed to price,” which will boost margins. The pizza maker is benefiting from a “benign cost environment” and has not needed to increase its main menu prices.
Brown raised his target price on the stock to 590p from 470p. Of analysts who report their recommendations to Bloomberg, four rate Domino’s a buy, while five have hold ratings and one recommends selling the shares. The average analyst estimate calls for the stock price to decline in the next 12 months.
Domino’s said Mar 28 that online sales rose almost 45% in the first quarter to £59.3m (€73.6m). Sales at stores open at least a year in Britain grew 3.6% in the period. The delivery company also said it’s confident it will open 72 new stores this year. According to Brown, the new stores generate sales about 20% above the historic average.